Accountancy software: A buyer’s guide

We shed some light on selecting an accountancy package

Ocean, a successful mail order catalogue business, was a nicely profitable company turning over around £10m, but within a few months lost control of its finances, stopped paying some key suppliers – who consequently stopped supplying goods – and thereby turned profits into losses. The company itself went bust, though the assets of the business were bought out by another mail order company which continues to trade as Ocean.

Having the right accounting system for your business is not sufficient to ensure financial control, but is necessary. There are a wide variety of software solutions out there, some with variable add-on options, suitable for all sorts of company from small businesses with simple accounting needs to medium-sized, more complex businesses. As certain types of system are better suited to certain types of businesses, clearly, the key is to get the right one for your company.

The key features

There are a number of features you need in an accountancy system, such as standard financials, general ledger, receivable and payables, profit and loss balance sheets, and invoicing. Sales order processing, inventory management, multi-currency, e-commerce transactions, CRM (customer relationship management) and network capability will be essentials for larger organisations – these can be sold as separate modules, but many all-in-one packages include them as standard.

The most basic systems currently on the market offer single-user access and proprietary databases, while the more sophisticated systems use SQL server (a network-based database package you’ll need to buy separately), which results in faster processing power and multi-user capability.

The increasing security and ease of remote access through the ‘cloud’ in recent years has also seen the proliferation of accountancy software packages using a Software-as-a-Service (SaaS) model. Your accountancy data will be stored on a remote server, meaning your records should be secure in the event of local drive loss or failure and easily transferable between systems. However, you should be comfortable with the idea of a third party holding your sensitive business data – make sure you thoroughly investigate user reviews before purchasing to ensure your provider can be trusted.

You can upgrade to more substantial versions of a given supplier’s system, though each step up is quite involved and time consuming. You’ll need a reseller for this: these are not packages to buy off the shelf and install on your own the way you would a new version of Microsoft Office. Resellers are specialists at installing accounting software systems, and will provide consultancy advice on system suitability, installation support (including designing the reports you want from the system) and training. This can take anything from three days to several weeks depending on the complexity of the system.

Most packages are pretty intuitive and the tendency to use a Windows-based platform means your accounts staff should find most aspects of available packages familiar. Online training is also available for the more popular packages, as well as classroom-based training.

Establishing your requirements

If you are considering a new accountancy software system, it is probably driven by a need – perhaps for more management information, or more users, or more speed. In order to get a clear sense of your accountancy system requirements, you should review your overall business. “You have to be clear in your own mind why you need a new system. It can be for technical reasons, the processing is too slow or you may have changed your hardware platform,” says Paul Booth, technical manager of the Institute of Chartered Accountants of England & Wales (ICAEW). “Or you may have opened more offices and need something that will run in several locations on a network. The key factors for change are a need for better functionality, better reporting and analysis, and web trading integration.”

Stephen Temple, director of accounting firm Mazars, says: “The most important thing is to do an internal assessment of what you need from the business, the type of transactions, IT platform, e-commerce strategy and how you want the business to grow.”

If you handle e-commerce transactions, you will need to purchase specialist software. Popular providers in this area include Shopify, X-Cart and Actinic. Many of these solutions have the capability to integrate with mainstream accounting software, and some accounting software packages offer e-commerce as part of their own offering.

Stability and security are key issues and as your main point of contact will be the software reseller, it is important to establish precisely how they work. Temple stresses: “You should control software upgrades as opposed to letting the reseller have unlimited access to your network. Best practice is for the supplier to have access only to a test environment so that you can test the upgrade before applying it to your system even though this may be more expensive.”

It is advisable to involve your auditor or accountant in the selection process, as they can provide input about the type of system they think you need. Presenting accounts in a compatible format can reduce accountancy fees. Booth says: “It is helpful to have a system an external accountant is already familiar with and this could make the bills smaller. The accountant is likely to know the pitfalls.”

The major packages

There are a number of different ‘families’ of accounting software systems; each offering different packages from basic to sophisticated. It is worth choosing the one you think will best fit your needs in the medium term, at least, because upgrading within a family is far easier than changing from one to another, in terms of data conversion, set-up (charts of accounts and reports and so on) and user training.

There are too many packages for us to describe them all here, however read on for descriptions of the main players:

Access Dimensions

Formerly known as Access Accounting, Access Dimensions is one of the more popular solutions out there, with around 30,000 regular users. Its modular suite is highly flexible, and integrates with Microsoft’s Excel spreadsheet software for ease of use. The software includes a powerful ledgers creation system, allowing creation of and easy access to essential business information.

Dimensions is just one package of many offered by the Access Group, with CRM, stock control, finance management and many more packages available, most of which integrate with each other.

Brightpearl

One of the most popular sector-specific packages around, Brightpearl is uniquely tailored to the needs of retailers, allowing them to manage sales centrally from disparate sources including physical retail, e-commerce, online auction sites, and telephone and wholesale orders.  The integrated system also has the capacity to automatically manage inventory and re-purchase stock when needed – if someone buys an item on Amazon, for example, the remaining stock available to customers will go down across all your other sites automatically. Of course, it also includes the basic accounting features you’d expect in any mainstream package.

A free trial is available, and you get the first three months of Brightpearl free, although its powerful features don’t come cheap. The Starter package will set you back £199 a month, with the Business version costing £299. For users with advanced needs, the Professional suite costs a steep £499 a month. Optional extras are available including the Ecommerce bundle (an extra £79 a month) and phone support (£19 per user per month).

ClearBooks

Describing itself as a “simple and beautiful” online accounting solution, ClearBooks is part of a new wave of cloud-based accountancy packages targeted at small and medium-sized businesses. Offering features such as automated invoicing and a simplified, stripped-down interface, its web-based application can be accessed from PC, mobile and tablet devices, allowing you to manage your finances on the go.

The company is UK-based and all the data it holds is securely encrypted, so your sensitive information should be in safe hands. The “full plan” service is £20 a month (excluding VAT), with a non-limited and non-VAT registered version available for £9 per month. Stripped-down versions of the ClearBooks service are also available, with packages starting from £7 a month.

Crunch

UK-based Crunch combines RTI-compliant cloud-based accounting software with a team of fully accredited in-house accountants, making it ideal if you’re not so computer literate or you value the advice of real people occasionally. The accounting team doesn’t charge by the minute, and you receive unlimited access when you purchase any of their three-tiered subscription packages. Accountants will also deal with HMRC on your behalf as an Authorised Agent, putting paid to those notoriously lengthy hold times and slow paper correspondence.

Crunch uses a three-tiered pricing system, with the ‘standard’ package costing £64.50 per month; this will get you the unlimited in-person support, the accounting software, VAT registration and filing, year-end accounts and director’s payroll. The full-featured package will set you back £126.50 per month, with additional features including IR35 contract review, annual return filing, self assessment and general bookkeeping.

Kashflow

This accounting and invoicing software is becoming increasingly popular, and it’s not difficult to see why. Part of the Iris group, Kashflow‘s main selling point is ease-of-use; the cloud-based software can be accessed through PC, mobile and tablet apps, and it promises to eschew the accounting “jargon” prevalent in some other packages. You can save invoice templates, creating them instantly when customers accept quotes, and advanced features include credit control- allowing you to simplify the onerous process of chasing up late payers – and automated purchasing. Indeed, the range of features it offers puts it head and shoulders above some other bare-bones solutions, with some of the most competitive pricing around.

Packages start at a flat fee of £5 a month plus VAT, with the advanced business and payroll package costing £15 a month. Each price contains free 24/7 support, access on all mobile devices, stock control management, unlimited quotes and receipts, and more.

FreeAgent

If you’re a freelancer or small business with basic needs, FreeAgent represents a particularly cost-effective solution. The cloud-based software can track expenses, payroll, and billed time, and automatically generate estimates and invoices; essentially, everything you would need as a typical sole trader or start-up with typical needs. It can also keep track of your cashflow and project profitability, allowing you to highlight and account for your venture’s strengths and weaknesses. FreeAgent also allows you to file VAT, RTI and self-assessment directly to HMRC. Like Crunch, FreeAgent also offers a dedicated team of support accountants to guide you through the process.

Pricing is competitive, and is tiered based on your company structure. Sole traders will pay £24 a month (exclusive of VAT), partnerships £24 a month, and limited companies £29 a month.

Intuit QuickBooks

A relatively new player in the world of accounting software, Intuit has quickly garnered popularity amongst small business owners due to its extremely scalable and multi-functional offering. As well as offering common features including the ability to manage VAT and track sales and expenses, its e-commerce functionality allows users to accept card payments and bank transfers through Intuit Pay, send invoices, and allow you to work directly with your accountant. Intuit can also connect directly to and synchronise with your business bank account, saving untold hours in manual entry.

The software is managed entirely online via the cloud, and as is the case with much cloud-based software, pricing is structured on a monthly model. The most basic package, which gives you a bare-bones package without extraneous features such as e-commerce and foreign currency, starts from £7.20 per month, whilst the full-featured package giving you access to all Intuit features starts from £17.40 per month. All packages come with free payroll for unlimited employees, meaning you won’t have to worry about upgrading when you take on new staff.

Microsoft Dynamics NAV

Formerly known as Navision, Microsoft Dynamics NAV describes itself as a full-featured Enterprise Resource Planning (ERP) solution which allows mid-size companies to manage their accounting, finances, supply chain and operations in one package.

The user interface is based on – and integrates with – Microsoft’s Office 365 webmail service, creating a familiar working environment and allowing users to manage their email, calendar and files in the same place. This is a scalable solution with advanced modules such as CRM, e-commerce, inventory management, order processing and integration. The software is only available through specialist resellers, so prices will depend on your individual needs and business structure. Officially licensed resellers can be found through the Microsoft Pinpoint service.

Sage

Sage is the oldest and best-known of accounting software packages. It has expanded substantially in recent years, and now offers everything from very basic packages smaller than you are likely to need to very substantial systems far larger than most of you will need.

Sage One is the company’s flagship product, and like most modern accounting packages it can now be managed entirely online via the cloud. Targeted at small businesses and sole traders, the suite is competitively priced, with subscription rates starting at £5 per month for a limited period. Sage One offers all the features you would expect from cloud-based accounting software, including automatic invoice creation (with no limits), VAT management, and a “dashboard” system on which you can see a summary of your business’ performance. It also integrates with e-commerce software Sage Pay, allowing you to accept payments directly through an invoice and add them to your accounts automatically. 24/7 phone support is included in the price.

Sage 50 Accounts is targeted at slightly more established businesses, and boasts additional features such as foreign currency trading and the ability to add more users and extra companies. It offers integration with the cloud-based Sage Drive service, allowing you to work with your accountant in real time, view key business information via the Sage smartphone app, and process sales directly from a tablet device.

For larger businesses (turnover of £1m or more), Sage 200 software is available in both online and offline versions, with the offline version offering more features for a higher upfront price. The software is highly customisable, and the offline version contains a CRM module included as standard.

SunAccounts

Not related to the Sun IT hardware company, SunAccounts’ accounting module SunSystems Core would suit a business with at least a £10m turnover. It is a scaleable solution and is especially relevant to businesses with satellite offices.

It offers ledger accounting, budget control, analytical/project ledger, multiple budgets, dual base currency, tax reporting and customised reporting, and e-commerce transactions. It runs on Windows with a SQL or Oracle database, or Unix with Oracle. Licenses will cost tens of thousands of pounds, with significant ongoing maintenance costs, so only plump for this one if you’re sure you will need all the extra features.

SAP

SAP’s Business One is a product aimed at small businesses with up to 200 employees. The German company’s software is marketed as a full-service solution, taking in sales, customer relationships, financials, operations and more. Its integrated nature means users will spend less time carrying over information between different management software packages, but it is not a plug and play product; installation generally takes two to eight weeks.

As you might expect, such a comprehensive solution comes with a somewhat hefty price tag. Prices start from $20,000 for five users, and the on-demand version of the software starts from $99 per user per month; still expensive compared to some of the budget solutions out there.

Xero

One of the most popular packages on the market, Xero offers powerful accounting features targeted at small businesses and sole traders from the extremely competitive price of £9 a month. Features include ‘fast bank categorisation’ (automatic importing of your latest bank and PayPal transactions), real-time budgets, simplified invoicing, and connectivity to more than 300 third-party accounting apps. Expenses are simplified too – you just have to review and approve receipts within the cloud-based software.

Starter packages cost £9 per month, with the Standard costing £20 and Premium, for larger businesse with more complex needs, costing £25 per month. As with other packages, a 30-day free trial is available.

Buying Tips
  • Summarise requirements: Be sure to approach several resellers with these
  • Review your proposal: Use auditors for this
  • Run in parallel: Keep the old system running until you’re confident the new one is working properly
  • Don’t skimp: Saving even a few thousand might not be wise if you can?t get the information you really want easily
  • Take your time: Plan on spending at least six months before the new system is in use if you want to do a thorough business review
Check Your Requirements
  • Assess your business requirements: Do you have expansion plans?
  • Scalability: Can the system expand as your business grows?
  • Existing data: How easily will it convert to your new system?
  • e-commerce: Does your proposed system integrate web transactions?
  • Your network: Will you need new database software or servers? Make sure you involve IT in the upgrade discussions
  • Multi-currency: Do you have import and export requirements for entries?

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